Oil Falls as Middle East Fears Subside

Oil prices fell more than $1 a barrel on Friday as worries receded over the threat of disruptions to Middle East supplies due to Saudi Arabia-led air strikes in Yemen.

Goldman Sachs said the bombing of Yemen would have little effect on oil supplies as the country was only a small crude exporter and tankers could avoid passing its waters to reach their ports of destination.

North Sea Brent crude was down 90 cents at $58.29 a barrel by 0640 EDT after hitting an intraday low of $57.76. U.S. crude was down $1.00 at $50.43 a barrel.

 
Oil jumped around 5 percent on Thursday, its biggest daily gain in a month, after air strikes in Yemen by Saudi Arabia and its Gulf Arab allies sparked fears that escalation of the Middle East battle could disrupt world crude supplies.

The Saudi-led coalition launched more air strikes on Friday against targets in the Yemeni capital of Sanaa, controlled by Shi’a Houthi fighters allied to Iran.

Worries over the possible impact of the geopolitical tensions on the Bab el-Mandeb Strait, the closure of which could affect 3.8 million barrels per day (bpd) of crude and product flows, put oil prices on track for weekly gains.

Brent was headed for almost a 5 percent weekly rise – the biggest gain since early February. U.S crude was set for a 10 percent jump – the most since the start of 2011.

But Yemen is a small oil producer, with an output of around 145,000 bpd in 2014.

via Reuters

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